Report or Not Report?...That is the Question
Has your company ever had a worker’s compensation injury whereby your company paid the medical bills and did NOT report the claim to your worker’s compensation carrier?
The worker’s compensation statute requires all work related injuries be reported to the employer’s respective worker’s compensation carrier as quickly as possible.
Prompt Reporting of Claims: The insurance industry will confirm that when a claim is reported promptly and they are able to contact the injured worker very quickly the odds are in favor of the injured worker not retaining an attorney and therefore, keep claims cost lower.
Some employers will pay the medical expenses in order to not affect their loss ratio and/or their experience modification calculation.
Understanding why a company would self-pay, I hope you will find it helpful to know what exposure your company has so you can make the best decision for your company.
Scenario: An employee is injured on the job and your company pays the medical bills and does NOT report the claim to the worker’s compensation carrier.
Response: By not reporting the claim to your insurance carrier, your company violated the insurance agreement between your company and the carrier. At a later date, if the claim becomes more serious and therefore more complicated (i.e. Surgery, Adjustment of Claim etc.) and then your company reports the injury to their worker’s compensation carrier, your carrier has the right to either accept or deny the claim. Since your company self-paid your company acted as the insurance company. (This applies to all insurance policies).
- Report all claims to your carrier so your carrier can obtain the proper discounts on the medical bills.
- Discuss with your carrier to find out if they will accept your company reimbursing them for medical expenses.
- This will reduce the medical expense your company would pay; improve your company’s loss ratio and most importantly your company has complied with the policy provisions of prompt reporting and avoided the chance of your carrier denying the claim if it becomes more complicated at a later date.
- By reporting the claim promptly to your insurance carrier your company is also complying with the IL Worker’s Compensation Statute.
- By allowing your carrier to pay the medical bills, your company would also avoid potential exposure under the Secondary Payer Statute.
Not all carriers will allow reimbursement. If your carrier will not allow reimbursement and your company still desires to pay the medical bills you should talk to your carrier to allow your company to report the injury for “Notice Only”. Your company would be responsible for trying to negotiate discounts on the medical bills with the medical providers. This is not recommended because when an insured self-pays they now have the “Secondary Payer” exposure they need to consider.
What is the Secondary Payer Statute? The Secondary Payer Statute was authorized by the Social Security Act and states that Medicare benefits are secondary to the following lines of insurance:
- Worker’s Compensation
- General Liability and Medical Payments
- Automobile Liability and Medical Payments
- Excess Liability
- Professional Liability
- Self-Insured Plans
- Group Health Insurance
Basically, if the injured party becomes Medicare eligible either by age or disability within 30 months from date the claim is closed, Medicare will file for reimbursement from the PAYER OF MEDICAL BENEFITS.
Section 111 of the Secondary Payer Statute requires the Responsible Reporting Entity aka RRE which can be the insurance carrier or a self-insured entity to report claims to Medicare and Medicaid or CMS which oversees Medicare. If the injury is a worker’s compensation claim, the RRE must report to the IL Industrial Commission if the injured worker misses 3 working days to comply with the IL Worker’s Compensation Statute in addition to file the claim with Medicare/Medicaid to comply with Section 111 of the Secondary Payer Statute.
The Responsible Reporting Entity (i.e. insurance company, self-insured employer or company that self-pays medical bills) must register with the Coordination of Benefits Contractor (COBC).
A penalty for not reporting or late reporting claims to CMS is $1,000 per claimant/day of noncompliance. This penalty is in addition to the other risks such as Medicare reimbursement and/or the costs associated if your carrier denies picking up the claim at a later date.
This is very complicated and to be safe, you should discuss with your carrier to see if they would allow you to reimburse them for incurred medical costs.
If your insurance company will not allow reimbursement the benefits of reporting all claims to your insurance carrier far outweigh the risk of self-paying and not reporting the claim.
Your company purchases insurance for protection from insured exposures. To avoid the exposures mentioned in this article, REPORT EVERY INCIDENT to your insurance company to comply with applicable State and Federal reporting laws.
* This article provided by Tim Patton, Vice President, J.L. Hubbard Insurance & Bonds, 217.877.3344, www.jlhubbard.com